Black and white stripes could be huge on the catwalks next
season – for Dolce and Gabbana have been sentenced to prison for tax evasion.

The designers were both handed 20month terms for failing to
pay the Italian authorities €408million (£350million).

In one of the few high-profile tax cases to reach court in
Italy, Domenico Dolce and Stefano Gabbana, who count Kylie Minogue and Kate
Moss among their celebrity fans, were convicted of failing to declare royalties
of about €1billion (£860million).

A judge in Milan ruled that they used a holding company in
Luxembourg to avoid Italy’s corporation taxes for years. The designers and
their accountant had already been fined €400million (£340million) in April in a
related case.

Under the Italian justice system, anyone found guilty of a crime is
automatically granted at least two appeals. In the event of a final conviction,
jail sentences of two years or less for non-violent crimes are typically
suspended.

The convictions come days before the luxury brand opens a
new shop in New Bond Street in London. They follow an investigation that began
in 2008 as part of a tax-avoidance crackdown amid the eurozone crisis.

Dolce and Gabbana had initially been acquitted of tax fraud
in 2011, when a different judge ruled there was insufficient evidence to indict
them.

However, after an appeal to the country’s supreme court,
prosecutors were able to re-open the case by dropping the fraud charges and
pressing for convictions on tax evasion instead.

Dolce and Gabbana’s Milan office was last night still
composing a statement for the media. When the charges were first made public,
Mr Gabbana condemned the Italian tax authorities as ‘thieves’, and threatened
to leave the country.

Tax evasion is thought to cost Italy €200billion
(£170billion) a year. Several cases involving celebrities have led to
out-of-court settlements; in 2000 opera singer Luciano Pavarotti paid 24billion
lira (£8million) in back taxes, while MotoGP champion Valentino Rossi agreed to
hand over €39million (£33million) in 2008.